Prepared by

Ira Epstein & Company

The current bull market in stocks began in November 1994 and it's been an awesome stampede.

Corrections will come and go, as we saw last Friday when the Dow dropped 247 points. I believe the bull market has resumed and will continue. But until the Mini S&P begins trading (September 9th) how does the small investor get long an overnight position with controlled or limited risk?

With options buying worthwhile calls can be expensive and although potential loss is limited to the premium expended, most options end up expiring worthless. My solution to this is the bull call spread: buy a call and sell a higher call. Cost is reduced by the amount of premium sold–which often greatly limits overall risk. The drawback? A limit on potential reward–which can be reduced or eliminated if the liquidation is timed properly. Exact strikes and expiration months depend upon the time period that can be afforded.

In summary, I believe options are an excellent tool to employ in your trading arsenal. They can slow down the entire game and can be used as primary positions themselves or in conjunction with faster-moving futures.

August 21, 1997 Tim Zurick

Ira Epstein & Company

223 West Jackson, 7th Floor, Chicago, Illinois

Added to the WWW 08-22-97
Last updated on 08-25-97

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